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5 Reasons to Delay Retirement

Sticking it out for just a few more years can pay huge financial and personal dividends.

It seems like from the moment we start working, we dream of the day we can retire.

Well, hold your horses! Because you may be better off financially -- and personally -- by sticking it out in the 9-to-5 world just a little while longer. In this episode of Motley Fool Answers we present five reasons why you should consider delaying retirement.

Read the transcript of this episode below and subscribe to the Motley Fool Answers podcast for free on iTunes or Stitcher. New episodes are posted each Tuesday.

Transcript

ALISON SOUTHWICK:

This is Motley Fool Answers. I'm Alison Southwick and I'm joined by Dayana Yochim and Robert Brokamp, personal finance experts here at The Motley Fool.

Let's just get into it. It seems like from the moment we start working, we dream of the day we can retire. Usually on the beach, somewhere, with an endless supply of Mai Tais. But snap out of it, people, because you should be in no hurry to retire, and today we're going to talk about five reasons why you should delay retirement... not indefinitely... just a little bit. By the end of the show, you'll be equipped to create a happier, healthier retirement and then it's time for a rousing game of Ask a Foolish Question. That's what I'm calling it, anyway.

So our top five reasons why you should wait to retire. And number one is working just a few years can do wonders -- I tell you -- wonders for your retirement security.

ROBERT BROKAMP:

Yes. It's true. And by retirement security, you can measure that in many ways. How much you can spend each year in retirement. The chances that you'll run out of money in retirement. There are various reasons why this is true.

Let's look at an example. Let's say you're 62 years old. You have a portfolio worth $500,000 and you're going to get $16,200 from social security. Sixty-two is the year you can first start taking social security. What happens if this person waits until 66?

ALISON SOUTHWICK:

Four years. Four additional years.

ROBERT BROKAMP:

That $16,200 jumps to $25,344.

ALISON SOUTHWICK:

Whoa. Not bad.

ROBERT BROKAMP:

Why is that? Because every year you delay social security, it goes up approximately 8%. Plus social security is based on your 35 highest-earning years. So if those last few years are among your best, you kick out some of those lower earning years. And the important part of that is it's guaranteed income.

I know everyone has their doubts about social security, but once you get it, I think you're going to keep getting it. And having part of your income guaranteed -- as opposed to coming from your portfolio -- is huge, because you know you're going to get it. The stock market isn't going to do anything to it. If you get tired of managing it, you don't have to worry about it. So having more of your income made up of social security is a great thing.

The portfolio -- how much could that grow -- that $500,000? You wait four years. Assuming a 6% return, you're talking growing to about $688,000. So you add about one-third of that. Why? Well, you've had four more years for it to grow. You've been adding to it for four more years. So you put those together and it added a lot of extra retirement security, or at least gives you more money to spend in retirement.

ALISON SOUTHWICK:

And everyone loves more money.

DAYANA YOCHIM:

I am totally convinced, Robert.

ALISON SOUTHWICK:

Oh, but wait! We have four more reasons.

DAYANA YOCHIM:

Oh!

ROBERT BROKAMP:

Dun-dun-duuuun!

ALISON SOUTHWICK:

Let's get on to number two then. Once you leave work, you're responsible for a lot more of your health care.

ROBERT BROKAMP:

Right. And you're also giving up other employee benefits. Look at health care. Most people in retirement will get Medicare. You don't get that until you're 65. But even a couple who retires at age 65 will have to have $220,000 saved just for health care, according to Fidelity.

Now, if you retire early at 62, like our previous example, you don't have Medicare. You've got to cover all your own health care expenses, so Fidelity says you're going to need an extra $17,000 per year to handle that. So as soon as you leave work, you're going to probably be responsible for more of your health care.

DAYANA YOCHIM:

And health care is also one of the highest expenses for retirees.

ROBERT BROKAMP:

Right... and it's difficult to predict if you're paying a lot of it out of pocket. But people don't also [realize] you have vision. You have dental. And basic Medicare does not cover too much of that. And then there's other employee benefits. You don't have flexible spending.

If you put in $2,550, the max for this year, you don't pay federal, state taxes on that. Social security taxes. So you're talking about everyone who maxes out flex spending, they're saving $400 to $1,000 in taxes. That's another thing someone doesn't have once they retire.

Plus all the other stuff. People get technology through work. They get food through work. All kinds of stuff...

DAYANA YOCHIM:

The occasional beer carts that roll through the hallway...

ALISON SOUTHWICK:

If you are working at The Motley Fool, you get a beer cart. Yeah.

ROBERT BROKAMP:

We visit it before every podcast, as you can probably tell. So you're giving up a whole lot of stuff when you retire early. Something to think of.

ALISON SOUTHWICK:

All right. So reasons one and two are about the money and the hurt to your wallet that it will cause if you retire early.

But number three, we're going to get a little bit more emotional and talk about you.

ROBERT BROKAMP:

The touchy-feely.

DAYANA YOCHIM:

It's about the hurt to your ego.

ALISON SOUTHWICK:

It's about the hurt to your ego. Number three reason why you should delay retirement is that people rely on their jobs for a great deal of their social network and self-worth. You maybe didn't realize this, listeners, but a lot of your self-worth and feeling good about yourself comes from your job.

DAYANA YOCHIM:

Yeah. And you take that away, and you have a recipe for depression and isolation.

ROBERT BROKAMP:

Dun-dun-duuuun!

DAYANA YOCHIM:

Dun-dun-duuuun! People think, "Yay! I don't have to work anymore." And then after a while, the honeymoon of non-stop leisure time is over. You wake up in the morning and you're like, "Okay, great. Now what?"

ALISON SOUTHWICK:

I was going to say. It reminds me of this quote that I stumbled upon. It says by Susan Ertz. I don't really know who she is. But she said, "Millions long for immortality who do not know what to do with themselves on a rainy Sunday afternoon."

DAYANA YOCHIM:

Right. So people, especially early on in retirement, they truly do experience a sense of loss. Your loss of responsibility -- the role that you've played all your life. The loss of a routine. You don't have some place to be when you get up in the morning, so it's like, "Okay. What's going to happen?"

ALISON SOUTHWICK:

I'm going to watch a lot of Court TV...

DAYANA YOCHIM:

Or Real Housewives...

ALISON SOUTHWICK:

Real Housewives... a lot of game shows.

DAYANA YOCHIM:

But one of the most important ones is the loss of the relationships. These are ones that you might have taken for granted, but when you retire, you have to put in the extra effort to get together with your former colleagues.

So this is a major transition... and it might be a happy one; it might be one you've been looking forward to and there's all this great stuff about it. But it's still stressful, so you need to plan ahead about how you're going to deal with this identity crisis, just like you planned the financial portion of your life.

So take some time now to develop your interests outside of your official job. Take up a hobby, or if you've got one already, think about how you're going to cultivate that even more. Maybe even something that you turn into a small business.

ROBERT BROKAMP:

There's a fellow I know named Doug Short. He was a subscriber to my Rule Your Retirement newsletter service. But I could tell he got more and more interested in retirement. He started contributing articles. He also, on his own little website, was creating these charts showing things like valuation of the market, and where inflation is going, and stuff like this. He retired. Spent more time on creating these charts.

And all of a sudden, he started showing up on CNN and in Barron's. And he was doing this at like a McDonald's outside of Philadelphia or something like that.

ALISON SOUTHWICK:

Not working there. Just having a cup of coffee.

ROBERT BROKAMP:

Exactly. With one hand getting the Egg McMuffin and the other one using his Excel spreadsheet. And then eventually, another site, Advisor Perspectives, bought it from him and now he still does the stuff, but now as an "employee." So this is his retirement, and as he tells me, he's actually busier now than he ever was.

But he loves it, and it started from a hobby that he was doing right before he retired. He was also creating websites for the local orchestra. So it was another way to turn a hobby into something that gives him a lot of meaning -- and income -- in retirement.

ALISON SOUTHWICK:

I'm not anywhere close to retirement, but the closest thing I probably ever had to retirement was when we had Snowmageddon a few years ago. I don't know if you remember this, but DC shut down. Like no one went to work. No one went anywhere for maybe like a week or a week and a half. You didn't have work.

DAYANA YOCHIM:

I didn't have to go to jury duty.

ALISON SOUTHWICK:

I didn't have a kid yet, then, either, so I really was just free to do whatever I wanted.

ROBERT BROKAMP:

Did the kid come nine months after Snowmageddon? I'm just curious.

ALISON SOUTHWICK:

No. No, it did not. It was not a Snowmageddon baby. So the first day I was like, "Cool! I'm going to watch TV all day. And I'm going to blow through a marathon of some show or something like that." And then by the second day, I'm like, "Well, maybe I'll bake some bread." And then by the third day... I mean, by the end of the week, I just wanted to blow my brains out. I was so bored with myself and so bored with TV and I couldn't wait to get back to work and see people again.

ROBERT BROKAMP:

Well, as a question, ask yourself who are some of your better friends?

ALISON SOUTHWICK:

Dayana...

ROBERT BROKAMP:

See, that's why I said that.

DAYANA YOCHIM:

And you got it.

ROBERT BROKAMP:

There's a family that my family and I often go out with. Vacations. We have [00:09:41] on Saturdays. Buck Hartzell. Met through work. You think about if you're one of those people that has a lot of social connections connected to work, what's going to happen when you leave work.

ALISON SOUTHWICK:

Yeah. Which is why Dayana and I are going to retire somewhere...

ROBERT BROKAMP:

Together.

ALISON SOUTHWICK:

...five miles at least. No more. Actually, we live less than a mile away from each other now. We should probably keep that distance.

DAYANA YOCHIM:

That is our blueprint.

ALISON SOUTHWICK:

One mile. Less than one mile.

DAYANA YOCHIM:

If you move one house over, though, I'm going to have to move one house over just to keep us [within the limit].

ROBERT BROKAMP:

You can have an invisible dog fence, where you guys... Once you move out of the sight of a certain thing, you get shocked with a collar.

ALISON SOUTHWICK:

Oh! You can't contain our friendship.

Let's move on to the number four reason why you should wait to retire, and that is that you and your spouse may drive each other crazy.

ROBERT BROKAMP:

Yes. This is actually true. Studies have shown in the first couple of years of retirement, it's an adjustment. So general life satisfaction and satisfaction as a couple goes down. It's worse if one person is still working and one person retires. It's even more worse... worser... the worsest...

ALISON SOUTHWICK:

Worserer...

ROBERT BROKAMP:

...if it's the husband who's the person who is not working and the wife is still working. And I think this is hilarious. In Japan, there is something called "the retired husband syndrome." It affects an estimated 60% of wives who have husbands who are retired and it manifests itself in rashes.

Exactly. Yup. The literal translation for it from the Japanese is "one's-husband-being-at-home-stress syndrome."

DAYANA YOCHIM:

But it's true, if you think about it. You've gone from being together maybe three hours a day, with having to run errands and do other stuff on the weekends, to being together 24/7. So now all of those annoying habits that you only had to put up with for a very limited amount of time are there all the time.

And the alone time that you enjoyed -- that's now in short supply. So you have to sort of find the balance between being together and being apart, and you have to learn to be together all over again.

And the good thing here is to actually, consciously go out and find what the things we like to do together are. What are the recreational activities or projects that we enjoy doing together? Then come up with the things that you like doing solo, and make that your sacred alone time.

ALISON SOUTHWICK:

Then also, aside from the interpersonal hanging out together or not hanging out together, there's also dealing with money.

DAYANA YOCHIM:

Yeah.

ALISON SOUTHWICK:

Everything costs money.

DAYANA YOCHIM:

Right. Any financial sore spots that were in the relationship before -- those also become more obvious and more pronounced. So if you had different spending priorities, now you're retired. You have this pile of money (I hope) and maybe one person wants to spend it on home improvement projects. The other person wants to spend it on travel. Or you have different ideas about how much you should help out your kids or spoil your grandkids.

So you've been thrust into this entirely different financial situation. You've done the retirement math and now you need to go back and do your family finances to map that out.

ROBERT BROKAMP:

With all this free time, you've got to fill it with something, and a lot of those somethings cost money, and you don't always agree on how much you should be spending and what you should be doing.

DAYANA YOCHIM:

So having this conversation, well, we did an entire show about couples and cash. And we cover this topic a lot -- about how to sit down and have the conversation, and come up with priorities and some guidelines to come to resolutions that make you both happy.

ALISON SOUTHWICK:

In my mind, I'm thinking that I don't even know... and again, I'm still a long way from retirement... but I don't even know what's going to make me happy in retirement. Is that going to become clearer as I get older?

DAYANA YOCHIM:

You have a little work to do.

ALISON SOUTHWICK:

I do have a little work to do.

ROBERT BROKAMP:

I was thinking of all this stuff my wife and I used to do before we got married. We would rollerblade. Go camping. Go hiking. Stuff that I'm not sure we're going to be doing as much of, or would want to do as much of, in our seventies and eighties. I think you do have to come together. What recreations and things do we still have in common? And are we still physically able to do it?

DAYANA YOCHIM:

Right, yeah. What, at this age, can you still do? But to ask yourself to come to this idea of, "What it is that I'm going to do with my time. What is going to drive me?" Ask yourself, "What it is that I'm going to regret not having done? And what are some things I always enjoyed doing but I never had enough time to do or to explore?"

ROBERT BROKAMP:

Right.

ALISON SOUTHWICK:

All right. And our fifth and final reason why you should delay your retirement. It turns out that it's kind of bad for your health.

ROBERT BROKAMP:

It could be. Several studies have demonstrated this. One is a study of Shell Oil employees. They looked at the folks retired at 55 and those who retired at 65. Those who retired at 55 were more likely to die over the next decade than those who retired at 65. Another study from out of London that was called "Work Longer: Live Happier" found that retirement reduces a person's likelihood of being in excellent health, raises the risk for depression, and the risk of developing at least one diagnosed physical condition.

Now some of these studies are mixed, especially when it comes to the emotional stuff. If you had a really stressful job and you retired, that actually can help. But it's pretty clear that going from a situation where you get up, you move around, you go to an office, and then go to where you get up, stay in your pajamas, and sit around all day is not good for your health.

And also, if you're asking yourself, "I wonder what segment of the population is experiencing the fast-growing rates of sexually transmitted decisions..."

DAYANA YOCHIM:

Weren't you just asking me that the other night, Alison?

ROBERT BROKAMP:

...the answer is senior citizens. The CDC actually reports that rates of STDs in seniors had doubled from 2000 to 2010 because you've got to fill your time with something. We're living longer and staying vibrant. So, be safe out there, folks.

ALISON SOUTHWICK:

Just because you can't get pregnant, it doesn't mean you can't get something else!

ROBERT BROKAMP:

And that is the main reason. They stop using protection because they think, "Well, we're not going to get pregnant," and they forget about the other stuff.

ALISON SOUTHWICK:

And there's a lot of other stuff.

DAYANA YOCHIM:

Senior syphilis...

ALISON SOUTHWICK:

We're actually going to get back and talk even more about senior citizens... swinging senior citizens with syphilis later on in the show, so stick around, folks.

ROBERT BROKAMP:

It will be scintillating!

ALISON SOUTHWICK:

All right. Let's wrap up this conversation with your guys' one best piece of advice for people thinking about when to retire.

DAYANA YOCHIM:

I think my one best piece of advice would be to figure out what is going to substitute for your work community. Because, again, the people we know best -- the people we make friends with -- are often the people we spend a lot of time with come from our job.

So start cultivating these outside interests or friendships, research social groups in your area, and think about places you could help. You have a career's worth of talent and experience to share. That's valuable. People want you to plug into that.

Here's where volunteering comes in. Maybe you don't have a lot of time to volunteer right now, at the end of your career, but try different groups. Try it once a month. It's going to take a while for you to find a good fit, but volunteering ... there's a lot of great stuff about it. It gives you a community. It gives you a sense of purpose.

ROBERT BROKAMP:

There's a recent study from Merrill Lynch and Age Wave that 20% of retirees -- one of the number one determinants of a happier retirement is having a purpose.

DAYANA YOCHIM:

Yeah. So the takeaway is really do start working on cultivating your community so you have people to talk to, places to go, and important work to do.

ALISON SOUTHWICK:

I imagine when people are right facing retirement, they see there's like a light at the end of the tunnel, and they're like running toward that light. And then when they actually get out into the sunlight, they're like, Oh! What now?

DAYANA YOCHIM:

Yeah.

ALISON SOUTHWICK:

And so, have a little sense of your community even before you get outside the tunnel.

Robert, what's your best piece of advice?

ROBERT BROKAMP:

I would say that people who are reaching their late 50s and 60s -- the piece of advice I would say is realize that this is a great opportunity to do something with your life that you've always wanted to do. You hopefully have some money in the bank. The kids are out of the house. You have an opportunity to say, "Okay. What is it that I want to do with the rest of my life?"

It might be being retired. There are happily retired people. Studies actually show that the happiness after that transition into retirement for couples does go up again to where you're even happier than you may have been at any other time of your life.

DAYANA YOCHIM:

You've learned to be companions again.

ROBERT BROKAMP:

Right. So that might be fine. But you also might be, "You know what? I didn't actually want to retire fully. I just wanted to change my career." I know a story of a woman who, in her fifties, took money out of her 401(k) to go to nursing school. To become a nurse. Because that's something she always wanted to do.

Some people think, "I just don't want to work full-time," so they work part-time and then do something like volunteer, spend time with the grandkids, or something like that. So really think of it as, "What do I want to do with the rest of my life and how can I make that happen?" And figure it out before you retire. You always have to have a plan for how you're going to spend your money, but also how to spend your time.

***

ALISON SOUTHWICK:

It's been a while since we pitted you two against each other in a game of what I guess we're now calling "Flummox the Fools."

ROBERT BROKAMP:

It sounds good to me. I love it.

ALISON SOUTHWICK:

Okay. So now I'm going to test your knowledge about retirement. Winner gets nothing but smug self-satisfaction, which I think for both of you is enough.

DAYANA YOCHIM:

Yah!

ALISON SOUTHWICK:

That's plenty.

ROBERT BROKAMP:

It's better than retirement -- that's for sure.

ALISON SOUTHWICK:

All right. Well, let's get to the first question. A Wal-Mart greeter garnered media attention last month when the community rallied around him after a store manager told him to stop saying what to customers?

DAYANA YOCHIM:

My guess is this had something to do with a reference to God.

ROBERT BROKAMP:

I'm going to say, "give me a hug."

ALISON SOUTHWICK:

I'm going to need to give it to Dayana, because the answer was, "Have a blessed day."

ROBERT BROKAMP:

Some people bless other people by hugging them. That's all I'm saying.

ALISON SOUTHWICK:

I'm giving it to Dayana. Second question: The world's most expensive RV sold in 2014 for $3 million.

It was 40-feet long, 2-stories tall, and...

DAYANA YOCHIM:

Celine Dion's RV? Oh. Sorry.

ALISON SOUTHWICK:

...including the fireplace, a roof terrace, and can reach a top speed of 93 miles per hour. According to MotorAuthority, it must be powered by the hopes and dreams of the working class. In what country...

DAYANA YOCHIM:

Not Celine Dion.

ALISON SOUTHWICK:

Not Celine Dion. In what country was this RV sold?

ROBERT BROKAMP:

Well, if it's the working class, it's got to be a Communist... I'm going to say North Korea.

DAYANA YOCHIM:

I'm going to say a country estate in California that's a working commune.

ALISON SOUTHWICK:

You're both wrong. It's Dubai.

ROBERT BROKAMP:

Oh, yeah, of course.

ALISON SOUTHWICK:

Of course. All right, number three. As promised, we were going to talk more about senior, swinging, syphilis, or whatever, so that's our next question. We're going to talk about a crazy retirement community called The Villages. It's in California. Happy Hour starts at 11:00 a.m. and 100,000 people over the age of 55 live there. They're packed into 54,000 homes spread over a greater expanse of land than the island of Manhattan.

As reported in a delightful BuzzFeed article, putting what on your golf cart antenna signifies you're into swinging?

DAYANA YOCHIM:

Your keychain?

ROBERT BROKAMP:

Your 9 iron?

ALISON SOUTHWICK:

You're both wrong. The answer is a loofah.

DAYANA YOCHIM:

A loofah?

ROBERT BROKAMP:

A loofah? Because it's for scrubbing?

ALISON SOUTHWICK:

No. It's for sponge bathing? Bathing? I don't know.

ROBERT BROKAMP:

Oh, my gosh.

DAYANA YOCHIM:

I think it's more of a practical concern. A loofah would stay on the end of a sharp object.

ROBERT BROKAMP:

There's a version of The Villages in Ocala, Florida. I've been there, and it is an awesome place. Lots of fun stuff. People driving around in their golf carts that are all decked out like Mustangs and Cadillacs. It's pretty cool. When I get old, I'm going there.

ALISON SOUTHWICK:

Are you really?

ROBERT BROKAMP:

I'm going to protect myself, but I'm going there.

ALISON SOUTHWICK:

Do we need to talk to Elizabeth?

ROBERT BROKAMP:

No. It will be a loofah-free relationship, I think.

ALISON SOUTHWICK:

Good. All right. Fourth question. The Golden Girls, a popular eighties television show about four sassy retired women living it up in Florida... albeit not The Villages... all four lead actresses earned Emmys for the performances, which is no small feat. But what were the names of their characters again?

So whoever can name the most. We can start with one and then go back to the other.

ROBERT BROKAMP:

Okay. I've never seen it, so the only thing I'm going to say is Betty White, because she was the only thing I know about the whole...

ALISON SOUTHWICK:

But she wasn't a character.

ROBERT BROKAMP:

I know, but I don't know anything.

DAYANA YOCHIM:

Yeah, it can't be actresses.

ROBERT BROKAMP:

Okay. It was Wetty Bite. I think that was it.

ALISON SOUTHWICK:

Dayana, you only have to name one character from The Golden Girls to win this.

DAYANA YOCHIM:

Oh, gosh.

ROBERT BROKAMP:

Mildred. Hilda.

DAYANA YOCHIM:

Patty. Maude.

ROBERT BROKAMP:

Boots.

DAYANA YOCHIM:

Beatrice. Sassy.

ROBERT BROKAMP:

Goldie.

DAYANA YOCHIM:

Madge.

ALISON SOUTHWICK:

No.

DAYANA YOCHIM:

Kimberly?

ALISON SOUTHWICK:

Kimberly. Come on, you guys. The answers are Dorothy, Rose, Blanche, and Sophia.

ROBERT BROKAMP:

I have never seen that show.

ALISON SOUTHWICK:

How have you never watched The Golden Girls? It was the best.

ROBERT BROKAMP:

I didn't start watching Seinfeld until like two years ago, so I'm behind the times.

ALISON SOUTHWICK:

Oh, man. You guys are awful! Literally you only got one question right, and that's just because I gave it to Dayana for saying "it's something about God." I mean, that was a stretch.

DAYANA YOCHIM:

I'll take it! I'll take the win!

ROBERT BROKAMP:

We were definitely flummoxed, I believe. We took a big flummoxing.

ALISON SOUTHWICK:

I successfully flummoxed you Fools, but Dayana is going to win it with one to zippy.

DAYANA YOCHIM:

♫Thank you for being a friend♫

ALISON SOUTHWICK:

See? You know the show song!

DAYANA YOCHIM:

Yeah.

ALISON SOUTHWICK:

♫Travel down the road and back again♫

DAYANA YOCHIM:

♫Your heart is true♫

ALISON SOUTHWICK:

♫You're a pal and a confidante♫

DAYANA YOCHIM:

♫Dum dum dum...♫

ALISON SOUTHWICK:

All right, guys. That's going to do it for today. The show is edited by Rick Engdahl. Theme music composed and performed by our own Dayana Yochim. You can email us at Answers@Fool.com and don't forget to tell your friends about us, especially the ones who are really bad with money. Fool on!